LONDON: When I was studying in the Soviet Union, during Gorbachev’s last, faltering months, my landlady used to take the dog out for a walk at nine o’clock every night. For weeks I put this down to routine, until I once accompanied her and found several other local residents doing the same thing. Standing within walking distance of the Smolny Institute, where Lenin organized the Russian revolution, they would discuss the perils of Perestroika as their dogs chased their tails.
The timing, it turned out, was not accidental. They called it “Dog Hour” — the time when the state-sponsored news programme, Vremya, came on. They had no interest in watching it because they could not bear its lies.
None had any inkling that this superpower was poised to implode in the precipitate and chaotic manner that it did. The Party still reigned supreme and the state was armed to the teeth. But what was evident from this playful act of subversion is that the system had lost not only the capacity to deliver goods and services, but also the ability to present itself in a manner that people could find at all credible. Having lost all influence, all it had left was power.
Watching the business news the past few weeks, I have had the urge to take quick walk around the block myself. As a litany of corporate giants collapse under the weight of their own deceit it is impossible not to question the authority with which the endless stream of results and forecasts are cited and the integrity of those who have produced them.
So claims that these recent scandals are one-off aberrations are as believable as an Arthur Andersen balance sheet. Since America came down with Enron, a veritable rash of fraudulent accounting, dishonest practices and creative number crunching has emerged. The most common prognosis is that even more are to come. We have been warned to brace ourselves for an epidemic.
Research by the (London) Times last week showed that 10 of Britain’s leading 16 insurers have between them booked up to pounds sterling 5.7 billion ($8.6 billion) in profits that they have yet to earn, to boost the appearance of their financial strength.
We are no longer referring to a rogue, eccentric individual such as Nick Leeson, but an entire culture rooted in practices which either border on or venture into the criminal. Tales that were once put down to isolated, bad chapters in the story of capitalism’s otherwise unyielding cultural and economic hegemony are now shaping the narrative of its moral dislocation and systemic corruption.
“Indeed, many CEOs think this kind of manipulation is not only OK but actually their duty.” The rot had set in way before Enron. A combination of overly compliant governments and weak unions during the late 1980s and 1990s has bred a generation of arrogant business leaders whose appetite for excess knows no fiscal, let alone moral, boundaries.
At Wimbledon, hospitality suites are doing a roaring trade. J.P Morgan, one of the banks most heavily exposed to WorldCom, is entertaining to the tune of pounds sterling 16,000 ($24,000) a day.
IBM, which recently announced a 32 per cent drop in first-quarter profits, has a suite costing pounds sterling 20,000 ($30,000) a day. Business is the only source of British charitable revenue that is giving less in real terms than it was 10 years ago, according to a National Council for Voluntary Organizations survey.
Gone are the days when to point out such discrepancies would smack of class envy. The consensus that once took root, of a corporate world that offered choice, efficiency and entrepreneurship, has long since crumbled. In its place is a reputation more commonly associated with sleaze, excess and conceit.
In that sense the criminality and fraud most recently exposed in America serve to confirm and compound the popular belief that we are afflicted with a decadent, global corporate class, rather than contradict it.
Over the past 20 years we have been encouraged, enticed, cajoled and coerced into becoming dealers, either directly or by proxy. Prosletysers for profit set out to make capitalism popular; simultaneously evangelists for small government set out to make it necessary.
No longer able to rely on the state for pensions, homes and future security, many felt they have had little option but to turn to the market. In Britain, the number of those who own shares has leapt fourfold since 1979, the year that the Thatcher government was first elected.
Big business has been careful. And with every accounting scandal, it emerges as far less than the sum of its parts.—Dawn/The Guardian News Service.